"The countries in South Asia are afflicted with problems of confrontational politics, internal conflict and corruption," said Finance Minister M Saifur Rahman, speaking as chief guest at the inaugural ceremony of the the Safa international conference, organised jointly by the Institute of Chartered Accountants of Bangladesh (ICAB) and the Institute of Cost and Management Accountants of Bangladesh (ICMAB) at BCFC Centre.

The minister said such problems threaten to undermine the investment climate on the one hand, and the accountability framework for effective service delivery on the other.

"We need to look for long-run solutions to strengthen our institutions of political and economic governance," he made this observation.

He also said despite many successes, South Asia faces several challenges in attaining the millennium development goals (MDGs).

"We can make a very good progress in South Asia if it is possible to mobilise resources, carryout institutional and policy reforms, and be more accountable and transparent in governance," Saifur noted.

Eminent economist Dr Wahiduddin Mahmud, also a former adviser to the caretaker government, made a keynote speech on 'Resource Mobilisation and Management of Economic Growth in South Asia' at the conference.

Weak governance is a key constraint for South Asia to realise its economic potential, he said, noting that the governance environment is characterised by regional tensions, internal conflict, corruption, inadequate regulatory systems and a public sector with a poor service delivery record.

"All countries in the region have serious corruption problem, only the nature and scale vary," he said, adding the widening gap between the rich and the poor carries huge risks to stability and social cohesion.

The scale and nature of the governance problem differ widely across the region, he said, making an observation that the governance deficits in South Asia are reflected in an adverse investment climate and the high costs of doing business.

Regulatory burden, particularly with regard to tax, customs and labour, remains high, although improvements have been made in recent years, he went on.

On top of governance-related problems, poor infrastructure is cited as a major hindrance, he said, adding that the prime concern of most business firms in the region is access to reliable electricity followed by inefficient seaport and transport facilities and telecommunications.

Speaking at the conference, Commerce Minister Hafizuddin Ahmed said a new companies act is needed for improving corporate governance, seeking urgent consideration of his cabinet colleagues.

President of South Asian Federation of Accountants (Safa) Sunil Goyal, chairman of the conference committee Jamal Uddin Ahmad, president of ICAB ASM Nayeem and president of ICMAB Satipati Moitra also spoke.

Around 600 delegates from Bangladesh, India, Pakistan, Sri Lanka and Nepal are participating in the Safa conference.